Poverty reduction through cooperatives, self help group & micro finance

(Dr. Vrajlal. K. Sapovadia) #1

Eradication of poverty results from combined efforts of individual, society & government. Self Help Group, Cooperatives & Micro Finance has proven in Indian that it can lead to reduce poverty. Government should design conducive system to encourage cooperatives, SHG & micro finance. Capacity building to run small business is basic foundation on which the sustainable business exists. Education & training can do this. Micro Finance Institute should provide education, training and finance. In return they should oversee business transactions, account and share profit. In India, SHG finance has literally 100& recovery.


(Solomon Brayant Mpapale) #2

Dear Dr.Vrajlal,

This is the way to go.Already, Asia is leading the world in this regard and iam happy to note that even we in Africa are trying to borrow such good ideas.The Bangladeshi economist Mohamed Yunus through the Grammen bank and also other initaives there like BRAC have been in the forefront of poverty eradication efforts and have done very well to liberate millions from penury through Micro Finance and then empowered women as well.This is welcome.

Such initaives have been borrowed and transplanted elsewhere in India, Pakistan, Phillipines,Cambodia, Laos,and Thailand which is positive.

Education is key in this achievement and with the livelihoods of the locals greatly improved through micro finance interventions, withour doubt, conflicts are minimized.

Solomon Mpapale,



Dr Vrajlal
Yes cooperative Societies, self help groups and micro finance can lead to reduce poverty. These strategies have worked in my country sine independence and have contributed some extent to povert reduction especially among the disadvantaged grous- women. In our culture women in every community have always pulled together to cultivate fields for food crops, they work in groups on rotational basis in so doing they were able to grow enough food for their families and ensured food secuirty at household level. When trade and commerce was introduced, women started ‘Merry Go Round’ intiatives to pull resources together for their personal and family development. In one of the densely populated districts of Uganda, Kabale my home district,Merry Go Round Groups assited each member to acquire household items ranging from cooking ports to matresses and beddings to roofing the family house with iron sheets thus improving the standards of living for the famity.Once the family was comfortable and the wife/mother felt proud of her home. Women started investing in tangible assets, e.g. buying goats, cows, pieces of land for growing food. some started micro enterprises trading in food items, ; later they could afford to rent a stall in markets,they saved on a daily basis such savings were reinvested into the business. At this stage they could borrow from money lenders and later on from micro finance institutions. Earlier initiatives worked and the women were careful not to default. What I am trying to demonstrate here is that the poor have a stake in the reduction of poverty and that initatives started by them work better than those introduced by governemnt and donors. Micro finance institutions in Uganda, were until recently, dependent on external donor funds this made credit to the poor very expensive. Projets started by the people need a boost, companies could invest more in initiatives that will bring an income to the people as partners- producers and customers.

What the poor need are tools to do what they need and not hand outs. Governemnts have a role to play by designing programmes and allocating funds as a stimulus to boost development leaving the people to implement.

I belong to a saving and credit cooperstive Society by business women started by an association for business women in Kampala, the UGANDA WOMEN ENTREPRENUERS’ ASSOCIATION LTD. This is our programme, we are committed to it and we are helping women access the much needed credit without collateral. We lend on merit and use peer pressure to recover the loans. Every member has a stake in the society, is interested in monitoring performance and particpates in what is going on. We are proud tobe indepent free from political interferance. The SACCO is owned and managed by members for their benefit. Support to such a group to increase the loan potfolio may go along way to accessing more women meaningful credit that govenrnemt engaging in credit delivery.

Any strategy to reduce poverty that does not involve stakeholders in the formulation of that strategy may not succeed. Companies that produce what the people want, that provide employment, that builds supply and production chains, that spread income among the people, that offers shares to employees and members of the community to allow them take part in the decison making provcess as owners of the company may reduce indences of violance that may jeopadize the well being of the company. People like being part of a strategy or process, they want to feel a sense of belonging. Though poor, our people are proud.Take away that pride, expect resistance and violent reation.

On commerce fighting poverty I would like to say that cooperatives can contribute to reduction of poverty but on its own it cannot. Government support is required to regulate and provide seed fund to boost cooperatives.